Digital investment advice unlike traditional investment advice is automated and leverages algorithm-based tools in interfacing with clients without the need to have direct human interaction.
The provision of digital investment advice is still ‘Investment Advice’ (IA) for the purposes of the
Capital Markets and Services Act 2007 (CMSA) and as such carrying on a business of providing digital investment advice requires a licence from the SC.
However, the SC is cognisant that the business model used by providers of digital investment advice differs from traditional IA and as such, some of the current IA licensing requirements may not be applicable or suitable to digital investment advice. In this regard, the SC is working towards finalising a holistic framework that caters for both the ‘traditional’ and ‘digital’ advisory models.
Pending the finalisation of this framework, the SC is prepared to consider granting an applicant intending to undertake digital IA activity (DIA Applicant) a waiver relating to licensing requirements set out in paragraph 1 (a) to (c) of this Technical Note. A DIA Applicant intending to apply for such a waiver from the SC must submit its application with representations including its ability to satisfy paragraph 2 below which will be assessed by the SC in determining whether approval is granted or otherwise.
This Technical Note should be read together with the relevant Schedules in the CMSA and guidelines issued by the SC.